Google Gunning For eBay, PayPal

(MoneyWatch)  Google is going after Skype, eBay's voice-over-IP (VoIP) phone service and, more importantly, PayPal, its online payment business.

Google announced that it's releasing Google Voice to registered users of Grand Central, the VoIP company it acquired in June 2007, and will release it to the general public "soon."

Google denies it's going after eBay's business, but then again it used to say the same thing about Microsoft and software.

Here's what Google enterprise chief Dave Girouard had to say about Google online apps in 2007:

the Google Apps platform is not designed to replace Microsoft's core software ... 'We are not really out there to eliminate any applications. We are looking to introduce new ways to solve problems people have been having for years.'"

Here's what it said today about Google Voice:

"This is about allowing your existing phone to work better," said Craig Walker, now group product manager for real time communications at Google and co-founder of GrandCentral. "It's not that we are replacing your phone, we are giving [it] the ability to work better," he said.

Google's pitch should be attractive to users: a single phone number you can route to any of your phones, voicemail transcribed as text, free domestic and "low-priced" international calling, free conference calling and other features, all managed on a single screen.

Users will pay for international calls using Google's Internet payment system, Google Checkout.

At first glance, Google Voice is simply one more hook Google can use to grab customers and their data--users will have to open a Gmail account if they don't already have one.

But the new service is clearly part of a much bigger strategic play.

Most obviously, the service threatens to take market share from Skype by undercutting it on price. Skype is only free for calls to other Skype users, while domestic Google Voice calls will be free of charge.

More importantly, however, Google is threatening eBay's most prized possession--PayPal--by forcing users to pay for international calls using Google Checkout, which has had little traction to date.

eBay is delusional about the prospects for Skype, which failed to produce any synergies with its auction business, expecting it will grow 80% over three years, and it is also banking heavily on PayPal.

Make no mistake. Of all the successful giants of the Web 1.0 era, eBay is most in trouble. Amazon has expanded fruitfully in many directions, Yahoo still has a search business, and even AOL is still kicking.

If eBay is hanging its hopes for the future on PayPal, it better hold on tight, because Google is coming for it, and it smells blood.